Hourly Workers' Pay Fell most Since 1947 During the First Quarter

Associate are seen inspecting a 2013 Accord during a tour of the Honda automobile plant in Marysville, Ohio October 11, 2012.

Photo: Reuters / Paul Vernon

The Bureau of Labor Statistics announced drops in labor costs Wednesday, showing that U.S. workers and businesses were not as productive in the first quarter as had been expected.

Newly revised figures for the January-March period show that productivity measures rose by only 0.5 percent overall vs. the 0.7 percent originally estimated.

Hourly worker compensation played a big role too, plunging 3.8 percent in the first quarter instead of rising 1.2 percent, as originally estimated, marking compensation's steepest decline since the Labor Department began keeping track of the statistic in 1947. The manufacturing sector saw the largest drop in compensation, and when adjusted for inflation, hourly wages fell even more dramatically, to 5.2 percent.

Check out this interactive chart that compares increases in corporate profits (before taxes) to an American worker's average annual wage*. Corporate profits are expressed in millions of dollars.

The 3.8 percent decrease in hourly compensation plus the 0.5 percent increase in productivity combined to push labor costs in nonfarm businesses down by 4.3 percent. Labor costs reflect how much it costs a business to produce one unit of output.

Despite the quarter-over-quarter declines, compensation has risen 2.0 percent in the year-over-year measure while unit labor costs have gone up 1.1 percent annually.

Other adjustments include output, which was revised down from 2.5 percent to 2.1 percent, as well as growth in hours worked, which dropped from 1.8 percent to 1.6 percent.

Exclusive articles delivered to your inbox daily.

A year and a half after the Panama Papers leak hit headlines across the globe, the country's finance minister sat down with IBT to discuss what his department has been doing since then to clean up Panama's reputation on the world stage and keep the use of secretive tax havens in check.